Africa’s Emerging Fashion Industry

September 29, 2016

Some of the world’s fastest growing economies are in Africa, and there’s a growing market for both luxury fashion and fashionable mid-market clothing and accessories.

A growing middle class has money to spend on clothes and are taking an increasing interest in what they wear. Africa’s wealthy elite is also growing, and the continent is one of the fastest-growing markets for luxury goods. That’s particularly the case in Nigeria, where a fashion-conscious population is enjoying a high economic growth rate, but many other countries in the African continent are experiencing a rise in both wealth and interest in fashion.

Unlike China, where consumers immediately turned to foreign luxury brands when their incomes rose, Africa could be more inclined to fulfill its own internal demand for higher-end fashion.

There’s a strong tradition of craftsmanship and textile heritage and an emerging cadre of designers and entrepreneurs in the fashion space, coupled with a lack of penetration by foreign clothing brands.

Fashion industry activities are concentrated in stand-out cities and countries, in particular Lagos in Nigeria which is seeing a booming fashion scene and widespread interest in clothing. Nigerian fashion is significant because Nigeria is so large; one in four Africans is from the booming, enterprising country. Other markets, such as Cote d’Ivoire, are expected to see significant growth in high net worth individuals in the near future, so these trends are promising for the fashion industry.

A lack of foreign penetration

Foreign brands haven’t made much progress in penetrating even Africa’s most promising markets. Louis Vuitton has branches in South Africa but many other luxury brands find it hard to decide where to site a store, particularly in booming Nigeria.

Although Hermès International has many Nigerian customers, the brand has yet to find a suitable partner to open stores within that market. Although Nigeria has a roaring economy and shoppers are keen to splurge, the country also lacks commercial property. Newly wealthy consumers here crave a modern shopping experience, according to a recent McKinsey report, but Lagos offers them a only a small handful of malls.

Companies that penetrate the Nigerian market are likely to be ones that find innovative store formats to accommodate a severe shortage of commercial real estate.

Other countries in Africa may have wealthy customers but it’s still difficult to site a store in a handy location because the transport infrastructure limits their mobility.

With global brands presumably still scratching their heads, South African ones are muscling into the Nigerian market. South African retailer PEP opened 30 stores in Nigeria in only three years, and plans an eventual 50. Durban-based Mr. Price also plans to open 50 Nigerian stores (source: McKinsey). It looks as if the continent’s own brands are finding ways that elude western labels.

Clothing brands may miss out long term if they fail to capture this emerging luxury market now. Last year, nine of the world’s 20 fastest-growing economies were African. While the middle class is expanding rapidly, so are the super-rich. The number of African billionaires has more than tripled in the past five years. There are currently 55, according to African financial magazine Ventures.

Knight Frank estimates the number of African millionaires will rise 53% to 258,000 by 2024, the highest growth rate of all regions globally. Already Nigerians are spending close to $250 annually on luxury items. Although these super rich Africans represent a small market at present, it’s a group that’s growing more rapidly than on any other continent. Luxury brands that aren’t reaching out to them may be taking too short-term a view.

Across the continent, the middle class has tripled in three decades and now represent a third of total population, according to the African Development Bank Group.

The trend has partly been fuelled by a move towards stable salaried jobs away from traditional ones in agriculture or micro business. There’s now a middle class population of around 300 million people across the continent, defined by the ADBG as those with a household income of over $3,900.

This middle class lifestyle remains vulnerable to instability and there’s still vast inequality in income across the continent. Although the total middle class population of the entire continent is sizable, the transportation infrastructure and lack of commercial property frustrates efforts for vendors to access these consumers.

This puts local vendors in a stronger position, with less threat from foreign brands that have yet to figure out Africa’s market. Those few non-African brands that are entering Africa’s market tend to start with South Africa, which is a highly European market with European fashion tastes, or with North Africa where the middle classes make up a particularly high proportion of the population. Trend-led value-driven clothing retailer H&M has branches in Egypt, Morocco and South Africa. Fashion favorite Zara recently exited Nigeria but has stores in Egypt, Morocco, and South Africa, all of which have a high proportion of middle class citizens.

Local brands are already localized

African fashion designers are also in a strong position. Weak supply chains and physical infrastructure has limited penetration by foreign fashion brands.

There’s also a proud local heritage that means African clothing styles such as bold textiles are valued.

Other brands are catering to specific local values, identities, and needs. One of these brands is Maxhosa, a modern Xhosa-inspired knitwear collection aimed at a very specific time in the life of Amakrwala (Xhosa initiates). Tradition dictates that these teenage boys wear formal clothing for six months after their manhood initiation.

Reflecting the strong Christian sentiment across the continent, clothing that reflects the wearer’s faith is also popular. These include brand such as Trulife Apparel, and In God We Trust, both based in South Africa.

Whilst these brands may be niche, they are already established in a fashion market showing great promise. If foreign brands don’t figure out Africa’s markets, local entrepreneurs are going to own the entire market.